alt Hacker News“Our theoretical framework captures how entrepreneurs facing minor, wide, and extreme expectation-reality gaps engage in evermore sophisticated efforts to detach the venture’s externally projected appearance from its actual operational reality.”
Look, I’m not promoting fraud at all, but having been doing seed raising for the last eight months, there have been many times where I thought the only way to compete was by fudging the numbers (because everyone else is, basically). It’s one of several reasons I left this game and am pursuing non-traditional means of funding now.
Replies
Was it fudging expected numbers (forecast), or fudging actual numbers (revenue, etc)?
VCs are looking for a long-tail, if you have a 1% chance at 5B - 1T market, this is more interesting and impactful than 10% chance at 5M market.
And yes, 1% chance of success is considered to be unrealistic by common sense standards.
I'm guessing investors understand that there's high probability of the numbers being 'optimistic'.
I spent a few years hanging around the VC-adjacent scene in a major city, met quite a few of them (because I'm that way. elevator docent during events... priceless).
There is publicly performed theater around VCs which is pretty consistent, taught in incubators, etc., etc. So that's how they manage set and setting (grooming) for the marks. Internally there are certain tells, that they must act a certain way. There are arbitrary character tests and whatnot which provoke a "culture" if you will, similarly to how computer languages and tech stacks form distinctive cultures if left unchecked; there could be self-selecting pressures (for these behaviors) as well. This is unsurprising to me as someone who analyzed voting patterns, and was asked numerous times variations on the question "is it something in the water or 'new car smell'?" (I don't have an answer for that question.)
However VCs are much more stovepiped and cliquish concerning their actual selection process than people realize, I've heard it publicly described as "mafia like" by someone who I worked for and whose name many would recognize. I don't understand why this person, like so many others, invested so much effort... enough to get some serious butthurt IMO.
It's a distraction, it effectively destroyed a different company I was working for.
My understanding so far is that as humans we get bounded by our emotions, morals, incentives and fears. On the other hand you are competing against capitalism that tries to use any possible means to make profits. It treads along every possible path of whats not completely illegal. What benefits it is that either the laws are not yet defined to cover those situations or they are hazy enough that there is an escape hatch. You name any big company and they have gone through the path of doing something that was illegal or questioned. Just like critical mass or escape velocity, if you are big enough you get through the hurdles or otherwise you get stuck and make a good topic in some ones paper like this.
What is nontraditional? Seems like it could be even more rife with fraud with lower oversight.
You highlighted the basis for widespread corruption. At some point you no longer do it to get an unfair advantage, you do it because without it you get an unfair disadvantage. Widespread fraud is no different.
Good on you for saying no to committing fraud! It really sucks that this is unusual enough that it warrants a bit of positive feedback!
Thank you for having an ethical standard and the will to adhere to it.